Qatar to set up deposit insurance framework

Doha, May 18, 2014

Qatar regulators will set up a deposit insurance framework that will include a Shariah-compliant scheme, as part of efforts to modernise the country's financial sector, said a report.

The scheme is part of a strategic plan for Qatar's financial sector developed by the country's three regulatory bodies, which they aim to implement by the year 2016, reported the Peninsula.

The scheme would initially be set up under central bank law, a safety net that would promote financial stability, said the strategy plan published in the Qatar Central Bank (QCB) website.

The plan also calls for developing a Shariah-compliant equivalent to deposit insurance, an even-greater rarity, deemed necessary by regulators as Islamic banks now hold over a third of total banking assets in Qatar.

Under an Islamic version, any expenses and investments made by the scheme must comply with religious principles such as a ban on interest and pure monetary speculation. Bahrain pioneered Islamic deposit insurance in 1993, with others including Kuwait, Jordan and Malaysia also having developed schemes of their own.

Qatar's plan also calls for strengthening regulation of Islamic finance institutions to further develop the sector with key initiatives including enhancement of licensing criteria for Islamic banks, tightening corporate governance standards and those for the Shariah boards that oversee their operations.